1. Field
Embodiments of the present invention generally relate to the field of financial planning and financial advisory services. More particularly, embodiments of the present invention relate to a system for advising a user regarding the likely results of a particular portfolio allocation among a set of financial products.
2. Description of the Related Art
During the 1980's, a significant trend emerged in retirement savings. Traditional defined benefit plan assets began shifting towards employee-directed defined contribution plans like 401(k). As this trend continues, many individual investors will ultimately become responsible for managing and/or evaluating the sufficiency of their own retirement investments. However, many people are not well-equipped to make informed investment decisions. Further, the number and diversity of investment options available to individuals is rapidly increasing, thereby making investment decisions more complex by the day.
Some prior art programs, typically referred to as “retirement calculators,” require the user to provide estimates of future inflation, interest rates and/or the expected return on their investments. In this type of prior art system, the user is likely, and is in fact encouraged, to simply increase the expected investment returns until their desired portfolio value is achieved. As should be appreciated, one of the problems with this type of program is that the user is likely to create an unattainable portfolio based on an unrealistic set of future economic scenarios. That is, the portfolio of financial products required to achieve the X % growth per year in order to meet the user's retirement goal may not be available to the user. Further, the idealistic future economic conditions assumed by the user, for example, 0% inflation and 20% interest rates, may not be macroeconomically consistent. As a result, typical prior art investment packages simply allow the user to manipulate assumed economic conditions until a desired result is achieved resulting in misleading financial planning advice.
In view of the foregoing, what is needed is a financial advisory system that employs advanced financial techniques to provide financial goal planning and/or investment advice to help individuals reach specific financial goals and illustrates the chance that the financial products in their portfolio will meet their needs in the future.